The exchange controls relating to foreign direct investments will be greatly simplified as of 17 December 2012.

Many of the restrictions put in place over the last years will be removed pursuant to a new Circular 59 that has been issued by SAFE (China's foreign exchange regulator). This will have a large impact on inbound and outbound investments. Transactions can be done quicker as (i) fewer approvals will be required and (ii) banks will have more influence to review and process transactions without the involvement of SAFE. This indicates that SAFE is moving away from administrating individual transactions and being more focused on macro-supervision.

Highlights include the following:


  • For many transactions prior SAFE approval is no longer required. Instead the commercial bank will register the transaction using SAFE's online system.


  • SAFE approval is no longer required to:
    • open a foreign exchange bank account;
    • open a pre-establishment expense account;
    • convert foreign currency into RMB for preliminary investment costs;
    • purchase and pay foreign currency to foreign investors in the context of capital decrease, liquidation and allocation of dividends ahead of schedule.


  • SAFE approval is no longer required when a foreign investor pays the equity price to Chinese shareholders for the purchase of their shares in a Chinese company. If the payment is in cash only, this will be automatically registered with SAFE. If the consideration includes non-cash assets, the target company will need to register with SAFE that the foreign investors completed their payment of the equity price.
  • It is no longer required to open a special purpose account for certain types of transactions.

Outbound investments

  • SAFE approval is no longer required for the transferring of pre-investment expenses up to 15% of the total outbound investment amount in outbound investment projects. The remittance of the remaining investment amount is still subject to SAFE approval, however.